Just last weekend I watched a docu-series entitled “LuLa Rich” about the meteoric rise and fall of Lularoe – the crazy leggings company. I felt compelled to comment around this as I think there are so many takeaways. If you haven’t already watched it, I highly recommend doing so as soon as possible. So many lessons.
Firstly, I want to reiterate that I am in no way a journalist nor an “MLM Expert”. Yes I have nearly 30 years’ of experience. Yes I have worked with a few different MLMs and climbed the ranking tree. And yes I am considered to be in the top 1% of Network Marketers globally earning more than $50k per year in profit from product movement. So I feel I have some sort of credibility in saying what I am about to say.
“LuLa Rich” is a cautionary tale on how slippery the greed slope really is. Lularoe is the perfect storm of massive and rapid financial success, business ignorance, control and exploitation all rolled into one complete disaster. What started out as a very promising, exciting MLM has ended up badly for many people – both the company Founders and many, many and I mean tens of thousands of many Retailers who were wronged.
The documentarians I think largely did a great job of portraying a simple and very religious, strong family that really did mean well. At least that’s what they wanted us to think. In all honesty, I truly believe that DeAnne and Mark are good people at their core. I do feel they meant well. I’m a fairly perceptive person (you get that way after talking to thousands of people over the years) and I really doubt that they had malicious intentions. The old saying that “absolute power corrupts absolutely” rings very true in this story. Zero to $2 Billion in 2 years’ and then the cracks start showing. And fast. DeAnne and Mark were in that greed spiral of feeling untouchable and then wanting to take control in the worst possible way. Probably stemming from fear. I mean, I’ve been there myself – “holy hell where did all this money come from” and then being terrified as to if it will come again. I still maintain I don’t think DeAnne and Mark are bad people. They truly wanted all of their Retailers to be a part of their ‘family’. Not everyone’s picture of family is the same though is it?
Now I’m not going to run through the story blow by blow – that’s up to you to watch the docu-series and make up your own mind about it. I think it’s a very important and provocative story for our time in the MLM/Network Marketing/Home-based business space. It’s a tenuous time for sure – more and more people are losing their livelihoods to Covid. There’s that dreaded word again. More and more people are looking for opportunity beyond their jobs. It’s a time where more than ever before, we have an enormous moral and ethical responsibility to do the right thing. By us, by others and by our companies. It’s so incredibly easy to get caught up when you start earning the big cheques, then arrogance sets in. I’ve seen it happen over and over and over again. Questioning starts, then arguments, then law suits. It never ends well for anyone irrespective of whatever side they sit on.
What I would like to do here is reiterate the importance of being totally educated on what a pyramid scheme is and is not. We are living in a time where more people are educated than ever before in history. People can type in a search term in a few seconds and find out everything (well almost everything) they need to know about something. I mean, you can’t learn how to perform brain surgery by watching a You Tube video, but you get what I mean. Telling people “but we sell products” as a response to someone questioning whether or not we are a pyramid scheme is simply not going to cut it anymore. People need more than that. And I’ll be honest, I learned. Paying distributors ‘leadership bonuses’ that are fatter than their commission cheque is straight out illegal. Simple as that. You can’t make $18,000 in sales and then be paid $300,000 in bonuses. You are being rewarded for recruiting and that constitutes a pyramid scheme – pure and simple. So were the Retailers to blame? Absolutely not. When we sign that Contract to get started in MLM, we understand that we are being protected by that company’s legal department. Not the son of the Founders who just love working with Mum and Dad but have no legal expertise whatsoever. The distributors of Lularoe were duped – well and truly. No question of it. Now no-one gets legal advice for signing a contract with an MLM company. We all sign in good faith that the company has everything in place to be legal. Targetting women that are uneducated and inexperienced to me is predatory behaviour and if that is something you are doing right now – I suggest you stop it. Yes I agree that stay at home Mums are absolutely an under-utilised resource in most western countries. But trying to trick them into signing something they don’t understand and then trying to change the terms of your agreement with them knowing full well they wouldn’t understand it and knowing full well they were at a massive disadvantage is absolutely predatory, irresponsible and illegal.
I am incredibly grateful this story came to light. It highlights how dangerous a line we as Network Marketers walk. When people use the word “cult” to describe us, I’ll be honest, it makes me mad. If you look up the meaning of cult, it’s innocuous! We’ve made that word mean something so negative and condescending. It’s actual meaning is as follows:
- a system of religious veneration and devotion directed towards a particular figure or object.
“the cult of St Olaf”
2. a person or thing that is popular or fashionable among a particular group or section of society.
So explain to me what exactly is wrong with 2? Well I’m in the Australian Football League “cult”. I’m part of the tennis “cult”. I’m part of the motor racing “cult”. Let’s have another look at what it really means. So describing MLM as a cult is yes seen as demeaning and sometimes, rather hostile. But it need not be. We are a group of people that love our industry and our respective companies. What is wrong with that? Damn straight I’m in a cult! LOL
I felt the documentarians could have spent more time interviewing other Retailers who have weathered the storm and decided to stay on with Lularoe – to give a more balanced perspective. There only appeared to be one when the Retailers who were part of the class action lawsuit were many. I felt it was a little biased in that respect.
So my final thoughts. I don’t believe that DeAnne and Mark had in any way malicious intent. If they did, both the documentarians and them played a great act and deserve Academy Awards. To me, they came across as very, very simple people. Not what I would call highly intellectual. They chose to surround themselves in the corporate office with family instead of professional advisors who could have directed them to do the right thing. Instead they were all caught up in the greed and the glitz and glamour of the moment. And don’t think – fair reader – that any of us are immune to that. I’ve seen it happen over and over and over again with many companies that I’ve been with. People go from zero to earning big and they change. They get arrogant. They get sloppy. And then it gets messy. It has to – it’s a slippery, slippery slope and unless you are arming yourself with the right hiking boots and poles, you will fall. As did DeAnne and Mark. Now they are still operating which I think is great because it demonstrates that we are still a legitimate and legal industry and most of us operate from the highest of ethics and morals and professionalism. After all, this is precisely what I stand for. Protecting the little guy. But demonstrating to them what is possible. I think every single MLMer needs to watch this. Educate yourself on what a pyramid scheme really looks like. What happens when you make a lot of money very fast. What total immersion is and what control looks like. How do you know when you are being taken advantage of. What is quite simply right and wrong. Not everyone can tell. It’s so incredibly important to stay educated on what is happening in our industry and why. It certainly gives me greater hope and confidence and certainty. Hope it does for you too.